Check your options for getting out of debt

If you have lots of debts and are struggling to pay, there are things you can do to help you get out of debt.

If you have some money to pay your debts, you might be able to set up a Debt Arrangement Scheme (DAS) debt payment programme. This means you’ll be able to pay off your debts over a number of years. If you don’t have any money to pay your debts and you owe less than £17,000, you might be able to apply for bankruptcy under the minimal asset process (MAP).

You’ll need to decide what the best solution is for your situation. It’ll depend on things like:

the type of debts you have

the total amount of debt you have

how much money you can pay towards your debts

You’ll need help for most of these solutions, but it’s worth knowing what your options are. If you need more help understanding the different options, contact your nearest Citizens Advice.

Check how much money you can pay towards your debts

Before you explore any debt solutions, you’ll need to:

collect information about your situation so you can start dealing with your debts

check which of your debts to pay first - these are called priority debts

work out your budget and what you can afford to pay your creditors after you’ve paid your priority debts and living costs

check if you can increase your income to give you more money to pay your debts

check if you can reduce your living costs

talk to your creditors - you might be able to come to an agreement with them to pay off your debts, or get more time to work out your situation

If you don’t feel able to talk to your creditors directly, or they won’t agree to your offers, it’s worth checking to see if other debt options can help you.

If you’ve agreed to make payments to your creditors

If you've agreed to make payments to your creditors but are struggling to make the payments, you should check if other debt options could help you - there might be a better way forward.

If you have money to pay your debts

Try to make an agreement with your priority creditors before you explore any debt solutions.

If you can’t make an agreement with them you should still pay them what you can afford, but this might not stop them taking action against you. Check which debts to pay first.

If you have money left after paying your priority debts, get help from a money adviser. You might be able to:

set up a Debt Arrangement Scheme (DAS) debt payment programme - this is a Scottish statutory scheme. You’ll pay off your debts by making one payment a month to a payment distributor who then pays your creditors

set up a protected trust deed - this means you’ll transfer your assets and property to a trustee, usually an insolvency practitioner, who will manage your finances with the aim of paying back as much as possible to your creditors

Check if you can set up a DAS debt payment programme

If you set up a debt payment programme (DPP) under the Debt Arrangement Scheme (DAS) you agree to pay off your debts with one monthly payment to a payment distributor. DAS is a Scottish statutory repayment scheme. Payment distributors are firms or organisations that make payments to your creditors for you.

How long your DPP lasts will depend on how much debt you have and how much you can pay off each month.

If you set up a DAS DPP and continue to make your one monthly payment, your creditors can’t take any action to force you to pay your debts.

Anyone can set up a DAS DPP - it doesn’t matter how much debt you have. You will be able to get a DPP if:

you’ve had advice from an approved money adviser

you’re habitually resident in Scotland

you can pay off your debts in a reasonable time – generally this needs to be less than 10 years

Check if a DPP is right for you

If you’re thinking about getting a DPP it’s important to know:

a DPP does not stop a lender or landlord from recovering possession of a house but it is a powerful negotiating tool

it can take a long time to pay off your debts if you’re only making small payments

once the DPP is set up, your creditors can’t take any further steps to enforce payment of your debt

it could make it harder for you to borrow money in the future

Getting a DPP

Don’t pay for a DPP - you can get one for free. If you pay for your DPP the DPP continuing money adviser will take part of your monthly payment to cover their fees. This means less money will go to your creditors and it’ll take you longer to pay off your debts.

Check if you can set up a trust deed

If you set up a trust deed you make an agreement with your creditors to pay them back part of what you owe them. You agree to transfer your rights to the things you own to a trustee. The trustee can then sell these things, called assets, to pay back your creditors. You are also normally expected to make a monthly payment from your income towards your debts. This may be for 4 years but it can vary.

Your trust deed will be organised by a specialist, called an insolvency practitioner. This will usually be a solicitor or an accountant and they’ll deal with your creditors for you.

You’ll have to pay the insolvency practitioner for their services. The fees will be added to your repayments. The fees for a trust deed can vary and are usually much higher than for other debt solutions. If you set up a trust deed you should make sure you understand how much you’ll have to pay the insolvency practitioner and when.

Your trust deed can become 'protected'. This means that it will be binding on all your creditors, even if they haven’t all agreed to it. This means that your creditors can’t take any further steps to get back the money you owe them or to make you bankrupt.

have a regular, steady income but won’t be able to pay back your debts by contributions from your income in 4 years or less

you have belongings and property that can be sold to pay your creditors, such as investments, a car or a house

You should get advice from your nearest Citizens Advice before you try to set up a trust deed.

Check if a trust deed is right for you

A trust deed might not be the best debt solution for you. It’s important to know:

it can cost around £6,000, and the extra costs are added to your monthly repayments

you might have to sell your house

if you don’t cooperate with your trustee there’s a risk you could be made bankrupt

you usually can’t be a company director

you might not be able to carry on running your own business

trust deeds cover most debts but won’t include debts like child maintenance arrears or student loans

it might be harder for you to borrow money while you have a trust deed

Setting up a trust deed

Setting up a trust deed can have a big impact on your life. It’s important you get advice before you set up a trust deed. Contact your nearest Citizens Advice - they can help you compare your options and decide if a trust deed is right for you.

If after getting advice you think a trust deed is right for you, you’ll need to find a specialist insolvency practitioner. You won’t be able to set up a trust deed on your own. You can contact different practitioners to compare costs and find the best deal for you.

It’s worth finding a specialist close to where you live because it’s usually best to meet them in person.

If you have little or no money to pay your debts

If you don’t have any money left after paying your priority debts and living costs, or you only have a small amount, check if you can increase your income. You should also check if you can reduce your living costs.

If you still don’t have enough money to pay your debts you might be able to apply for bankruptcy, also called 'sequestration' in Scotland.

Check if you can apply for bankruptcy (sequestration)

Sequestration is the legal term for bankruptcy in Scotland. You might be able to apply for bankruptcy if you can’t pay your debts and the amount you owe is more than the value of the things you own.

The bankruptcy period usually lasts 12 months, although in standard bankruptcy you will have to pay contributions for 4 years. If you go bankrupt your creditors won’t be able to contact you about your debts or take you to court.

Bankruptcy can have very serious consequences, for example you could lose your home or your job. It's important to understand how it could affect you and get help from your nearest Citizens Advice before applying.

There are strict rules to follow if you apply for bankruptcy. Some of the rules apply for the time before you applied for bankruptcy. You could go to prison or get a fine if you’ve done anything that counts as a bankruptcy offence. You could also have restrictions put on you by the court, such as restrictions on your access to credit or the jobs that you can have.

If you’re earning and have a small amount of spare income

You will have to make payments towards your bankruptcy debts. This is called a debtor contribution order (DCO). DCOs usually last for four years.

If you miss two payments of your DCO, the trustee can instruct a third party, such as your employer, to pay deductions directly from your salary to the trustee.

Ifyou have no spare income

You won’t have to pay any money towards your debts during the bankruptcy period if either:

Applying for bankruptcy

If you want to apply for bankruptcy you must first get advice from an approved money adviser. Contact your nearest Citizens Advice or find your nearest approved money adviser on Money Advice Scotland's website.

If you decide to apply, your money adviser will usually help you complete the application form. You have to apply electronically via the Accountant in Bankruptcy website.